James Black (00:00):
Welcome back to another edition of the Exchange for our Entrepreneurs' podcast. I'm your host, James Black, and this week I welcome back yet another return guest to the program, Braden Sutton from BC Bud Co. Now, Braden isn't just the CEO of BC Bud Co. He's had an illustrious career as a trader, as an entrepreneur, investor at a young age. He's even written a book. And so in this conversation we'll talk a bit about the BC Bud Co. We talk about what is bringing him back to the cannabis industry after his experiences with Supreme Cannabis and 1933 industries. And then we talked a bit about his book and the motivation as to why he wrote a finance and what I would call a psychological slash philosophy book. There's a lot to it, and this'll be just one of many conversations I hope to have with Braden over the years on this program. So without further ado, Braden Sutton, my guest on this week's show. This episode of the Exchange for Entrepreneurs podcast. Enjoy.
(00:54):
James Black here with Braden Sutton. Okay. Braden is an old friend of mine, entrepreneur, investor, and CEO of BC Bud Co, listed on the CSE under the symbol BC BC. Braden, broadcasting from an undisclosed location. How are you doing today?
Braden Sutton (01:08):
I'm good sir. Thanks for having me, James. Surely appreciate it.
James Black (01:11):
Yeah, I won't tell people where you are, but I will say that you are somewhere nicer and sunnier. So there's a lot I want to talk to you about today. I was really motivated to talk to you, especially at the beginning of the year. I've been having a lot of conversations with entrepreneurs and executives about industry-wide topics. And when I think about Braden Sutton and your experience in the capital markets, I know you've been in a lot of different things, but cannabis comes to mind first and foremost. Now you're the CEO of BC Bud Co, and I really want to know that, this is a fairly recent listing and this is something that really fascinates me, that in a market where there hasn't been a lot of acceptance of the industry on the capital market side, it's been on a bit of a slew. What brings you back to cannabis? Why are you in this space when all the headwinds are against it? Everything else is not pointing in that direction.
Braden Sutton (01:59):
Yeah, that's a great question. I guess the short answer, I want to do good by this industry. British Columbia, for example, has a billion dollar black market. We're in year four of legalization. I think that's an opportunity just with respect to the transition over to the legal regime. It's going to take some time, but there's a major amount of cannabis being sold in this country, and I think each year as more and more of that goes into C45. There's a lot of brands right now, but I think a lot of them will go by the wayside. A lot of producers will go by the wayside. So the goal really is to create a multi-generational brand at a time where this is really a once in a lifetime opportunity, much like repeal of prohibition or anything. Because as I remind people, this is a plant with about 7,000 years of recorded use that's been illegal for 75 years. So I still see the opportunity.
(02:50):
I see that initial blow off of the mania, the pendulum kind of goes extreme in those instances. So now we're in the extreme low trough, lowest trough sentiment wise. And I think it'll go back. I think it'll take some time, but I want to be part of the positive move back capitulation, as it were, in the space.
James Black (03:11):
You mentioned C45. Can you just tell our viewers and listeners what that is?
Braden Sutton (03:14):
Yeah, it just refers to the Canadian legal framework. So anything that's not in the old medical regime or the black market, now known as the legacy market. And again, we're only four years into that ball game of legal. So another thing I remind people, when prohibition was repealed, the Volstead Act it was called, in 1933 in America. There was a 10-year battle, over a decade, where the old run runners and gin joints and the Canadian whiskey came down still. It took a decade for the legal market to really get hold. So again, I point out we're in year four, it's early days. It's going to be hard for half a decade, but I think people will be rewarded that can stick it out for the next four or five years.
James Black (03:52):
So it's funny, I was in Vegas for the MJBiz Conference back in November and I got a took from one of our clients that said buy illegal. And I assume your challenge in BC is much the same as anywhere else, especially in California and other states and provinces where there's still a huge black market. And I'm just curious from your perspective, how does a house of brands or producer, even someone just on the retail side, how do you break through the black market?
Braden Sutton (04:21):
Yeah, you've got to check every box. So you have to have phenomenal quality. You have to be incredibly consistent with that quality and you have to have value. If you don't have both of those things in terms of really hitting the mark quality wise, and then having the right price point, you're doomed. As we've seen with a lot of the legal offerings, the black market is still winning over price. You've got a lot of people where there's a bit of an education gap where they go, "Well, I can go buy an ounce of pot from my illegal store for $80." And you go, "Well, of course you can. You don't know what it is. You don't know if there's mold or mildew or heavy metals." Which there always is if you get it tested, which most people don't want to do. So as that education piece moves forward, I think people will realize that paying significantly more for something that you know exactly what's in it, where it comes from, that it's sourced ethically and legally and it's not contributing to organized crime, I think people are finally kind of waking up to that.
James Black (05:15):
Interesting. And now in your previous experiences with other public companies in the space, and just also observing what has happened in the Canadian space with the LPs, what are some of the observations, and I want to use the word mistakes. What are some of the mistakes that were made in, growing pains is perhaps even a better term, that the industry went through that you now know to avoid or are seeing as red flags that you won't go towards with this new company?
Braden Sutton (05:44):
Well, infrastructure is the big obvious one. You all remember, everyone remembers the term maximum funded capacity. Me and my partners have always said that's an absurd measurement. You've got the ability to produce a product and then you've got a retail demand on the shelf and people are asking for it. You need to have that retail demand. The product side, the commodity of cannabis is easy to fulfill. You can go source it, you can have contract manufacturer, you can buy it right across the country through a plethora of options for phenomenal quality. But how do you get people to ask for your brand, your bag of product, your pre-roll by name? So what everybody did was focused on this insane notion that we're going to grow the most and then we're going to export. And it's like, okay, well the export theory is great until those countries become mature, then that's gone.
(06:31):
Canada's not going to become some global leader in cannabis production, I don't think that's really realistic. Certainly to a certain extent, but not on a 10-year out basis. So really realizing the fact that there's a commodity being the underlying plant, it's not special. There's no moat, there's no real IP outside of genetics and a little bit of process stuff. So ultimately you need trust. You need brand trust. You need people to be able to connect to a brand, to want to ask for a brand, because it's a very fickle industry. People are very big on their Budweiser or their Kokanee, they're very big on their cigarettes, not so much with their wine, interestingly enough. Spirits, very, very much there's a brand loyalty.
(07:10):
Cannabis really struggles. So if you go into a store, you say, I really like the X, Y, Z, pre-roll and they go, "Oh, well here's another one, it's two bucks cheaper. Give it a try." Nine out of 10 people will give that a try, and if they like it, they're never going back to the one they liked before. So that goes back to what I mean, you have to really hit the mark. You have to provide value. Josh Taylor and myself, our mandate was always simple. We said we want to avoid any redundance and we want to make products only exclusively that someone would be willing to get in their car or their bike or whatever, go to the store and pull out money and buy. And you have to give them a reason to want to go do that. And if you can't do that, you're just another one of the 200 brands on the shelf from some opaque giant big box company that people will try all day long. But loyalty is going to be impossible to hook into somebody.
James Black (07:56):
Of course. And the product has to be legit because you're often not able to brand it, package it, and display it in a way that gives you any sort of advantage like you could with other CPG type products, right?
Braden Sutton (08:08):
So imagine a product where you can't label, you can't really use the packaging to your advantage. So you have to have this amazing bag appeal when they first see it. It has to be the right consistency, the right moisture, it has to smoke incredibly well. The effect has to be perfect and the price has to be perfect. That's a hard mark to hit consistently. So as we've seen, very few are doing it, and there's some good ones doing it, but certainly the big box guys that came out loud and proud did a poor job of most of those check boxes.
James Black (08:35):
For sure. And just as of this recording last week, big job cuts coming, Canopy announced-
Braden Sutton (08:42):
800 people. [inaudible 00:08:44]
James Black (08:44):
... Relative to the industry.
Braden Sutton (08:47):
And you've also got a market cap still. I think there's 500 some odd million shares out. So unfortunately if you look, there's a lot of gravity. There's a lot of air underneath that. So as Chris Perry actually recently pointed out, when you've got the little brands with maybe five or 10 employees and not huge sales numbers that are five or 10 mill market cap, you can easily get those to 20, into 30, into maybe 40 million and beyond. But when you're a billion-dollar company and you're not hitting the mark quarter after quarter, you hate to see it, but you've got a long way to fall before that sign hits bottom.
James Black (09:19):
Interesting. Yeah. And interesting to reflect on the companies that sold into the big consolidators in the industry that are now almost back as being the thesis for investment back into the industry. I don't want to say too many specific names, but I remember Haiku and Tokyo Smoke and brands like that, it almost sounds like that's where you're at, at that stage of size.
(09:43):
Let's change gears just for a second. So I know you wrote a book and I've never written a book in my life. I even have a hard time reading them sometimes. And I've got to ask you, what the heck motivated you to write a book? And it's not a short book either. It's over 250 pages available on Amazon called Money, Mind Beyond Speculation. We're a similar age and it feels like you've lived four lifetimes versus mine having gone through the book and knowing you. So tell me, and we'll branch off from here, but tell me why you wrote a book about investing and philosophy of investing?
Braden Sutton (10:18):
Well, I appreciate you bringing it up because it was very important to me. That book was over 500 pages. I've been writing it for over a decade. I spent two full years writing it through COVID, I should say editing it down. It was like a Tarantino movie that was five hours, how do you get this thing to two? And that was the hardest part because there was so much in there. I have lived many lifetimes. I've been speculating in the capital markets now for 19 years, you could almost say 20 at this point. And I've seen everything. I have been a part of a lot of really cool things. I've made millions and I've lost millions many times. So I think the impetus behind the book was twofold.
(10:56):
A, I wanted to reflect on where I made money and why, where I lost money and why. And I wanted to be able to go to, I had a really good mentor in a guy named Jamie Wheel, and we were in a coaching call once, and he's a bestselling author and he said, write this book to your 18-year-old grandson. And I thought, wow, there's a sort of notion or an avatar that if I could say, "Here you go, read this and please don't waste your twenties like I did." I wasted a decade chasing fluff and being promoted and speculating emotionally and not understanding asset allocation, not understanding risk. Not understanding parlaying and mitigating risk and how to spot opportunities and yet not get sucked in too deep. So a lot went into it.
(11:39):
In 2010, I wrote myself these rules, which, if you actually flip to the back of the book, there's an actual image of this journal entry, November of 2010. And I said, "Okay, I'm not going to lose money anymore." I got wiped out in '08 just had my first son. My son was born September '08, the week of Lehman and Bear finally got up to an OK Network, got cut and then some, was leveraged in '08 because of an advisor. So I talk a lot about the banking business, talk a lot about PR and press and the whole world of CNBC. CNBC is owned by NBC, NBC is owned by Comcast. Comcast is primarily owned by Vanguard. Vanguard is the biggest shareholder in the SEC 500.
(12:19):
So much like when you have a penny stock and you promote on Stockhouse, you create a company, the same thing occurs when the CEO of Intel shows up in CNBC. So helping people really understand how that world works, helping people understand why people buy lottery tickets, why people go to the horse race, why people go to the casino, why the casino house wins, why people go in anyway.
(12:41):
So I split the book in two ways, your mind and your money. And the last thing I'll share, because I'm very passionate about this subject, is I had a grandfather, military man, never made more than like 60 grand a year. And he retired very wealthy. He had a couple homes, he had an airplane, he had a beautiful life. He never worried about money. He treated it like fuel. It was fun coupons, it was paper for the paywalls of life. I had a father that made 250 to 300k a year very successful economically. He never had any equity, he never had any investments. He died with nothing, literally, after a 30 year career making almost 300K a year. So I really wanted to understand as a student of life and a student of money, what these two gentlemen did differently.
(13:29):
And I think I did a pretty good job and I've read every book I think we could both name and finance and behavioral economics. And I think I did a pretty good job kind of summarizing the message, which was really simple in this book and made it kind of a 200-page digestible, three hour read for a layman. I'm a blue collar guy with no exciting beginning to my life, so quite the opposite. And I want to encourage the working man. I've done every trade imaginable up until I was about 20 years old and then finally got my footing, wasted, again, a decade learning, pretty much retired at 30. And I wanted to be able to dissect all of those sorts of events, why and how then ultimately scale that knowledge to an 18-year-old, for example.
James Black (14:12):
Yeah, it's just an incredible story because I started my finance experience, working wise, same week you just mentioned there, the Lehman Brothers and Bear Stearns and watching the TV and just going, "What the heck has just happened here? I can't wrap my..." It was a beyond generational moment, but also one of those moments where you don't know what is going to come next. Do I have a job next week? Do I even go back to school? What's going to happen here? It's very jarring. So we saw it, we made it through it. And then obviously there was bad markets in the small cap space, especially in the mining side. And then we mentioned at the top of this show about the mining sector, or sorry, the cannabis sector. Again, it's not today's in fashion sector, so there's consequences of that.
(15:06):
But tell me, looking ahead to the year, looking ahead even beyond cannabis, what gets you excited? Is there's something that you would speculate on or something that you would, again, we're not offering investment advice on this program, but just something you would do more research on, something that gets you a little more excited than other things. What would you get up in the morning, turn your page of the paper too, as far as a topic and want to read about?
Braden Sutton (15:30):
Yeah, I'm a fundamental guy, so I will always be a gold and silver guy. I can't really help it. I love the metals. I love the metals, especially because the US printed so much money in the last 25 months. I think there's an arbitrage play with precious metals for sure. I would dissect that further and say, I love silver because it's a consumable precious metal. It makes it very rare. Most silver that's mined ends up in a landfill. Gold ends up as jewelry for the most part, or bullion. I love energy. I'll always love oil and gas for a number of reasons, both from a fundamental investment point of view.
(16:03):
I think that as long as we live, we will be burning petroleum. I think that natural gas is an opportunity, I think diesel fuel and even WTI, not because there's the ESG component. It's dirty, blah, blah, blah. I get it. But if you're going to eat food today, wear clothes and heat your home, unfortunately you're going to need it. If you're going to travel anywhere, have freight ever. It's not going to be electric in our lifetime. There's no replacement for diesel or for jet fuel, at least in the next 50 years. So I love uranium because I think it's going to actually help the world immensely. I do like the battery metals to a certain extent. I think the lithium thing is out of proportion, but the world always needs bubbles. I think there's other pockets of value in the battery metal segment, excluding lithium, that people overlook. So definitely a fundamental guy. I think that's why weed has always the appealed to me, because weed is like gold to me, and in a sense that I can understand tangible valuations, I can understand need.
(17:00):
I often give an example of Warren Buffet. The story was he was 10 years old, he cracked a Coca-Cola, drank it and goes, "Shit, I'm going to drink one of these every day of my life." And then that was his whole thesis for being the biggest Coca-Cola shareholder. I love a thesis that you can summarize in a sentence, I'm going to burn fuel, I'm going to buy bullion, I'm going to hope that uranium makes a change. I'm going to always be buying battery products.
(17:26):
So for me, I am a commodity guy through and through. I love special situation type things. I'm quite involved in the psychedelic space and private side. I know that came and went pretty fierce, but it's certainly an industry to keep an eye on. It's big, big in the United States and beyond. I'm a tech guy, but tech valuations are dicey when it comes to trying to time them. Bio-techs come off hard. So Canadian financials I love, but I always come back to, for me, the metals for the most part, I think because I can really easily surmise and summarize in my mind the demand, and I can easily come to the conclusion that our fiat government controlled currencies are eroding dramatically. And I think that means that that energy and metals are going to, in our lifetime when we're 50, 60, we're going to wish we just put it all into the metals, I do believe.
James Black (18:21):
Yeah, fair enough. No, it's funny you mentioned Coca-Cola and I always thought about who's going to be the Coca-Cola of cannabis. And maybe, I don't know if that's an apt question, but I think there's always room in any industry, especially consumables, to be the best product also with the best brand. And I think for a long time people thought it would be too based to be like, "That's not what we're going for. It's a different vertical, it's a different sector." But I go, why not? Why not have a product that you identify with as the best but also the most identifiable brand? And that's what I hope for you guys. I hope that's what you're developing. And maybe if people are paying attention to what you're doing, what's the best way for them to connect?
Braden Sutton (19:08):
I am personally on Twitter. I've been loud on there for a very long time, @BradenSutton. Instagram, I'm always approachable and available. My email is probably out there if anybody wanted to reach me by email, by phone. thebcbc.com is our corporate site. But I'm pretty accessible. As I said, Twitter's been an amazing place. I've interacted with everybody from Elon Musk to you name it. I've got some amazing friends like Jordan Peterson. People that are not accessible. I've always loved Twitter for that reason, as you can approach people that you'd normally never have access to. So that's definitely a place to connect again, Instagram, anywhere else.
(19:49):
But yeah, the BC Bud CO is out there as well. So any industry events, we continue to grow that brand coast to coast. So the visibility of that is the most important thing for me right now. And I think going off on the side a little bit, but I think again, back to the Buffet comment, is having the courage to be where everyone else is afraid to be is ultimately where not just fortunes are made, but the change of guard, the chips slide over to the other side of the table when you're willing to really dig in and build values in an arena where no one else is willing to be. So yeah, that's hopefully a long-winded answer to your question.
James Black (20:31):
No, no, no, absolutely. And it's something that we try to position the show as the intersection of where entrepreneurship meets the public markets. And we've talked about entrepreneurs like Elon Musk, you mentioned him and his retweets. And obviously people like Mark Zuckerberg, who've developed or poured billions of dollars into his Metaverse project. And we go, why are they doing that? That's not safe. I mean, Elon does a lot of unsafe things when it comes from what looks like an investment perspective, but I think that's the way they're wired. I think that's what people like you are wired as. You can't swim in the shallow water, it's not where you're going to have the best adventure, the most depth of investment opportunity.
(21:15):
And yeah, that's a great way to end the show, I think Braden, is to encourage people, I think, to read your book. I think it's a great read based on the parts of it I've read, and I'm going to go and dig into it a bit more because I think the 18-year-old James needs to read it, let alone the 40-year-old James. And yeah, encourage anyone who's watching to connect with Braden, thanks for being on the show and safe travel's, my friend.
Braden Sutton (21:44):
Thank you very much, James. Thanks for having me.
James Black (21:44):
Thank you again for listening to the Exchange for Entrepreneurs podcast, a proud presentation from CNSX Markets Inc. Operator of the Canadian Securities Exchange. As a reminder, the viewpoints on this show do not reflect those of the exchange and are solely those of the guests and do not constitute investment advice. For more information about the exchange, it's services and listed companies, please visit www.thecsc.com. Till the next show, thank you for listening, and don't forget to hit the like or subscribe button on your favorite listening platform. Thank you so much.